Two VLCC orders were placed by Dynacom Tankers earlier this month, scheduled to be built at New Times Shipbuilding and delivered in 2026, in an en bloc deal for USD 115 mil each, VV value USD 112.87 mil. These are the first VLCC newbuilding orders to have been placed since January this year, and before that the last set of orders were in August 2022.

Fixed year values for newbuild Tankers are currently at the highest levels since August 2009 and along with the volatility that has hampered the VLCC spot market over the last year, this has led to low orders for this sector.

These new additions to the VLCC orderbook coincide with an increase in values for VLCC newbuildings of 320,000 DWT which have gone up by c.2.18% since the start of the month from USD 122.86 mil to USD 124.61 mil.

Overall sentiment for Tankers is improving and this has lent support to newbuilding values across all sectors. Underpinned by Chinese demand, VLCC spot rates have more than trippled since the start of June from 22,358 USD/Day to 74,768 USD/Day today, an increase of around 246%, outpacing both Suezmax and Aframax earnings.

Of the 12 VLCCs currently on order, half are contracted to be built in China. South Korea ranks second, accounting for c.33% of orders, and Japan is in third place at c.17%. This indicates a clear trend as buyers move towards Chinese yards who have come on leaps and bounds in terms of Tanker newbuilidings, over more specialised yards in South Korea and Japan where Tanker orders have traditionally been contracted. As many South Korean yards are busy building the larger, big ticket orders such as LNG vessels, they are not as hungry to commit to new Tanker orders. As a result, with China so much more competitive than South Korea due to yard availability and cheaper labour, owners are choosing Chinese yards over the log established Tanker focussed yards in other countries.

Source: VesselsValue Author: Rebecca Galanopoulos Jones